Tue 24 Jun 2008
Data geeks can find the underlying index data at the following S&P link:
April 2008 S&P Case Shiller HPI (XLS)
From Reuters:
Home prices extend record slide in April: S&P
NEW YORK (Reuters) - U.S. home prices extended their record slide in April, with every top metropolitan area now posting annual losses and many showing double-digit declines, according to the Standard & Poor’s/Case Shiller home price index report on Tuesday.
From Bloomberg:
S&P/Case-Shiller Home Prices Fell 15.3% in April, Index Shows
Home prices in 20 U.S. metropolitan areas fell in April by the most on record, signaling the housing recession is far from over, a private survey showed today.
The S&P/Case-Shiller home-price index dropped 15.3 percent from a year earlier, less than forecast, after a 14.3 percent decline in March. The gauge has fallen every month since January 2007. The group began keeping year-over-year records in 2001.
Mortgage defaults and foreclosures are adding to the glut of properties on the market, while stricter loan rules are making it more difficult for prospective buyers to get financing. The prolonged real-estate slump, along with higher fuel prices and a shrinking job market, is taking a toll on consumers and the economy.
“The weakness in prices is going to persist,” Ken Mayland, president of ClearView Economics LLC in Pepper Pike, Ohio, said before the report. “The mindset has yet to change. We’ll be looking at year-over-year declines in home prices well into 2009.”
Home prices decreased 1.4 percent in April from a month earlier after a 2.2 percent decline in March, the report showed. The figures aren’t adjusted for seasonal effects, so economists prefer to focus on year-over-year changes instead of month to month.
The index was forecast to fall 16 percent from a year earlier, after a previously reported 14.4 percent drop in the 12 months ended in March, according to the median forecast of 23 economists surveyed by Bloomberg News. Estimates ranged from declines of 15.4 percent to 17 percent.
From CNBC:
US Home Prices Continue Record Declines in April
U.S. home prices extended their record slide in April, with every top metropolitan area now posting annual losses and many showing double-digit declines, according to the Standard & Poor’s/Case Shiller home price index report.
The S&P/Case Shiller composite index of 20 metro areas fell 1.4 percent in April from March and slumped by a record 15.3 percent over the year.
Economists expected prices for the 20-city index to fall 2.0 percent in the month and 15.9 percent from April 2007, according to the median forecast in a Reuters survey.
S&P said its composite index of 10 metro areas slid 1.6 percent in April for a record 16.3 percent annual drop.
Home prices in a dozen of the metro areas have fallen for eight straight months.
From the WSJ:
Great Depression Home-Price Declines
The Standard & Poor’s/Case-Shiller home-price index, which reflects prices in 20 U.S. cities, is expected Tuesday to be reported down 16% in April from a year earlier, worse than March’s 14.4% decline.
“Most of the severe price declines are appearing now,” says Mark Zandi, of Moody’s Economy.com, who says house prices are down nationwide about 15% from their 2006 peak. With heavy inventory still to plow through, “I expect prices, when all is said and done, will be down about 25% this time next year,” he says. That skid off the peak would rank it on par with the Great Depression.
From Bloomberg:
U.S. Consumer Confidence in June Probably Fell to 15-Year Low
A report from S&P/Case-Shiller at 9 a.m. may show house prices in 20 U.S. metropolitan areas plunged 16 percent in April from a year earlier, the most since records began in 2001, according to the median estimate of economists surveyed. Forecasts ranged from declines of 15.4 percent to 17 percent.
From Forbes:
On Tuesday, two indexes measuring the change in home prices in April are likely to show declines, as a glut of unsold homes continues to pressure the struggling market.
The March Standard & Poor’s/Case-Shiller 20-city index showed home prices tumbling 14.4 percent in the month to the lowest level since the index was started in 2001.
Press release and datasets can be found at Standard & Poor’s:
S&P/Case-Shiller Home Price Indices
June 24th, 2008 at 6:09 am
From the WSJ:
U.S.-Backed Mortgage Program Fuels Risks
FHA Struggles To Eliminate Loans For Zero Down
By NICK TIMIRAOS
June 24, 2008; Page A1
Mortgages that allow consumers to put little if any money down when buying a home have largely disappeared as a financing option available from private lenders. But they are still available — and growing more popular — through a government-backed program.
That’s raising concerns among critics who blame no-money-down mortgages for many of today’s housing market woes. And while federal housing officials are moving to end the practice, for now home builders are promoting the programs to move unsold inventory.
“I just smell a massive taxpayer burden coming,” says Sen. Christopher Bond (R., Mo.), who calls the programs “too good to be true.”
The offers — including “100% financing” — are made possible due to down-payment assistance programs run by nonprofit organizations. These programs are funded largely by home builders and also by private homeowners desperate to sell. The seller-funded groups provide enough down-payment money to buyers that they can qualify for a mortgage backed by the Federal Housing Administration, which requires at least a 3% down payment.
…
To critics, mortgages with down-payment assistance are similar to no-money-down subprime loans, which have triggered a wave of foreclosures. Most bankers believe defaults are so high because borrowers who encounter financial difficulties are more willing to walk away from a home when they didn’t put much of their own money into the purchase.
“The inescapable fact is that seller-funded down-payment assistance is particularly susceptible to losses,” says Howard Glaser, a mortgage-industry consultant and former official at the Department of Housing and Urban Development. “Too often today’s seller-funded loan is tomorrow’s foreclosure.”
June 24th, 2008 at 6:09 am
From the APP:
Old and new building permits get extention
Both chambers of the state Legislature Monday voted to approve and send to the governor a measure extending old and new building permits, in hopes of kick-starting the economy.
“I am very happy. It’s almost over,” said Stephen Patron, who heads up a Mount Laurel real estate development company and serves as head of the New Jersey Builders Association.
“It’s a sign both chambers realize the importance of economic development,” said Tim Touhey, executive vice president of the Builders Association.
“We got about 75 percent of the bad out, so it is a bad bill but we did the best we could with it,” said the Sierra Club’s Jeff Tittel, referencing various elements of the legislation environmentalists found objectionable.
…
The builders and their allies said the state faced the abyss of economic failure unless the permits — for vetted and approved projects — were kept alive between a time period starting 18 months ago and running to Dec. 21, 2010.
The extension had originally been proposed to last six years, before the bill was amended to shorten that.
June 24th, 2008 at 6:10 am
From Bloomberg:
GMAC’s $60 Billion Deal Loses Confidence as Mortgages Burn Cash
The 300 bankers gathered at New York’s Waldorf-Astoria Hotel last month faced a stark choice: Accept Sam Ramsey’s plea to restructure $60 billion of GMAC LLC’s debt or risk pushing the lending arm of General Motors Corp., the largest U.S. automaker, to the brink of insolvency.
“There was not room for slippage,” said Ramsey, 49, a former Bank of America Corp. executive who joined Detroit-based GMAC in September and became chief risk officer two months later. He pulled it off as banks led by New York-based JPMorgan Chase & Co. and Citigroup Inc. provided GMAC and its Residential Capital LLC mortgage unit with the biggest restructuring package since the credit-market rout began a year ago.
Whether that’s enough to ride out the worst housing slump since the Great Depression remains in doubt. Moody’s Investors Service cut GMAC’s credit rating one level to six rankings below investment-grade last week as ResCap burns through cash after losing $5.3 billion in the past six quarters.
“ResCap presents a very significant risk,” said Mark Wasden, the lead GMAC analyst at Moody’s. “There is no easy exit from their difficulties right now. We think the company will yet again find itself in need of additional cash.”
June 24th, 2008 at 6:11 am
Could it be the housing bubble was part of a plot to reconsolidate the average and the poor back into renters?
June 24th, 2008 at 6:18 am
From the WSJ:
Housing Study Says Worst Isn’t Over
As Local Markets Deal With Steep Drops
By AMY HOAK
June 24, 2008
The housing slump, already shaping up to be the worst in a generation, still hasn’t run its full course, according to Harvard University’s annual report on housing, released Monday.
And if job losses accelerate in coming months, that could push any recovery even further out, said Nicolas P. Retsinas, director of Harvard’s Joint Center for Housing Studies. Job losses, he said, could be “the last shoe to drop, but a pretty heavy shoe.”
The center releases its “State of the Nation’s Housing” report each year and the 2008 edition gave a grim prognosis for housing markets throughout the country.
Local markets are dealing with drops in housing starts, new-home sales and existing-home sales — corrections that are rivaling the deepest slowdowns since the World War II era, the center reported. On top of that, the fall in home prices and the rise in mortgage defaults are the worst on record since the 1960s and 1970s. All this adds up to a downturn that is “the most severe that we have seen,” said Mr. Retsinas.
Mr. Retsinas said that historically, housing markets usually recover after an economic recession and a mix of falling mortgage rates and dropping home prices. This housing downturn will likely take longer to rebound, he said, because of the high volume of foreclosures and the constraints in the credit markets.
June 24th, 2008 at 6:20 am
Why is home construction always called economic development???? Justy because you built a bunch of homes does not mean you have built are added to astriong economy. This so called economic growth is nothing gbut a house of cards
June 24th, 2008 at 6:39 am
repost from late last night…
the disaster i am waiting to see unfold is large scale defaulting on credit cards. given current bankruptcy laws, these are secured debts so people cannot currently walk away from them. the question is will congress step in and provide an out, similar to the debt forgiveness loophole they recently handed home loan defaulters.
Heck, if that happens i might go on a quick buying spree then default. regardless. any such scenario would break what ever is remaining of the US economy.
This scenario cannot be avoided. credit card debt is growing at record rates and is at record levels. it is 2 maybe 4 years at the most before we begin to see the cascade of credit card default. that is when i batten the hatches
June 24th, 2008 at 6:51 am
From the Star Ledger:
$32.9B spending plan clears state Legislature
A $32.9 billion state budget that cuts spending and imposes no new taxes won approval Monday evening in the Legislature, which also passed legislation to borrow $3.9 billion to build schools without seeking permission from voters.
Democrats hailed the budget, which is $600 million less than the one approved last year, as a “historic” step toward fiscal stability. Republicans called it “a missed opportunity” to cut wasteful spending that will hit taxpayers in the wallet.
It is a budget that will inflict some short-term pain in the hope of fixing the state’s troubled finances in the long run.
Critics predict reduced state aid could mean layoffs of police and firefighters, higher property taxes and hospital closings. Wealthier taxpayers will see their homestead rebates shrink or disappear.
But the budget also takes steps to shrink the size and cost of state government, both next year and into the future. The Personnel Department and Commerce Commission will be abolished. Senior state workers will be offered early retirement, a move expected to increase the state’s pension obligations by $255 million but yield recurring payroll savings of $77 million in the first year and $93.5 million thereafter.
June 24th, 2008 at 6:53 am
#4 R Patrick,
I thought it was a way to devalue the dollar and trigger inflation, making it easier for the government to pay off its debts. While execs/political donors line their own pockets through bonuses and stock options, and we get stuck footing the bill as losses from the collapsing bubble get socialized.
June 24th, 2008 at 7:01 am
#304 lisoosh from last night,
Still looking. Keep getting contacted for temp work, since I’m still employed full time not too interested in that.
June 24th, 2008 at 7:15 am
will trenton provide any relief for the
working class in new jersey.
or will it continue as a welfare state?
June 24th, 2008 at 7:22 am
tsk tsk mark, you should know the answer to that!
June 24th, 2008 at 7:29 am
mark (11)-
C’mon. Welfare state.
It’s a done deal now. Can’t be undone. Just look at the new school construction deal yesterday: there’s really no money available, yet we’re going to keep siphoning whatever can be cadged into a cesspool of ineptitude and corruption that’s already proved itself incapable of self-management, let alone the improvement of instruction for students.
June 24th, 2008 at 7:30 am
re 11 Welfare state
How would you tell the difference?
June 24th, 2008 at 7:30 am
The corrupt, lazy. larcenous and incompetent far outnumber the decent and good in NJ. If all state politics is a numbers game, this game is over.
The bad guys win here…every time.
June 24th, 2008 at 7:31 am
Jon Corzine is one of Obama’s “economic advisers”.
God help us all.
June 24th, 2008 at 7:32 am
Looking through listings this morning, I came across an interesting description: Olympic-sized Master Bedroom.
Or don’t I want to know?
June 24th, 2008 at 7:33 am
okay, I am sensing a scheme. Tell me what you all think about this:
House listed for $489,000 in 2005. Listed as having central air, gas heat, 3 bedrooms, 1.5 baths. Spent 185 days on market, price was lowered to $459,000 but sold for $423,000 in July 2006.
House was bought with 100% financing under a lender which was notorious for subprime lending.
House is listed in March 2008 for $460,000 but listed as having 2 bedrooms, 1 bath, no central air, and oil heat.
How is this possible?? How did this house go from gas to oil, lose a half bathroom AND a bedroom. Yes, the LA could have been careless, but it seems like the LA does not want this house sold. It is listed for more money than it was sold for, despite it not selling back in 2005/2006 PLUS not having the extra bedroom and bathroom. I think the “owners” and the LA are in some type of scheme. House has been on the market now for 110 days…and get this, there isnt a for sale sign on the front lawn. Something doesn’t smell right.
June 24th, 2008 at 7:40 am
http://minnesota.publicradio.org/display/web/2008/06/23/economy_2008/?refid=0
Two years ago, only two percent of those coming to her office and facing foreclosure were successful in renegotiating the terms of their mortgage with their lender, she says.
“Now, I want to say it’s upwards of 20 to 40 percent, somewhere in there,” Peterson says.
———–
Can anyone verify if holders are renegotiating at a rate of 20% or more in NJ?
June 24th, 2008 at 8:02 am
corzine on bloom this am ,,, will explain
how new budget will do wonders for NJ.
afterall , he has all of our best interests
in mind.
your home,,, etc.
June 24th, 2008 at 8:20 am
here comes johhnnny,,, to save the day
June 24th, 2008 at 8:25 am
lets see ,,, 72 month deals from gm, and
zero down home financing..
things must be getting a little tight.
i out to the gm store to get me a silverrado,, with the spinners.
June 24th, 2008 at 8:33 am
so 175K financial service job cuts, for every FS job loss ten additional jobs are lost, cleaning women, landscapers, staff at country club, car wash, dog sitter etc. So we are talking 1.75 million because of subprime.
Actually that 72 month deal is good. The pontiac G6 and Soltice is included. Soltice covt is a great mid life crisis car and the G6 is a great first car for your daughter. That said why would I want a 60K 10MPG monster with a 72 month deal zero interest deal. Heck I don’t even want it for free.
June 24th, 2008 at 8:34 am
mark,
If you really are in the market for a new car and you dont drive very much then a 0% loan on a car may not be a bad deal. they are essentially paying you as inflation is taking off. and heck worse case scenario the take the car back….. thats the american way now right?
June 24th, 2008 at 8:35 am
What inflation?
From Bloomberg:
Dow Chemical to Raise Prices an Extra 25% in July
Dow Chemical Co., the largest U.S. chemical maker, will raise prices on its products by as much as an additional 25 percent in July to make up for surging energy costs.
Freight surcharges of $300 per truck shipment and $600 per rail shipment will become effective Aug. 1, Midland, Michigan- based Dow said today in a statement.
Chief Executive Officer Andrew Liveris last month raised prices for June by 20 percent, the biggest boost in the company’s 111-year history, because of surging costs to make Styrofoam, pesticides and plastics. The additional increases were needed because of a “relentless” rise in the cost of energy and hydrocarbon materials, Dow said.
“The staggering increase in our costs over the past few months have forced us to take these further measures in order to restore our margins,” Liveris said in the statement.
June 24th, 2008 at 8:38 am
Does this apply to Saturn too? I like the Saturn convt headlights/taillights better than the pontiac soltice
June 24th, 2008 at 8:39 am
However, Case of Case-Shiller said in march 08, ‘Housing has hit bottom’.
June 24th, 2008 at 8:42 am
Renters do not have to worry because they don’t buy household cleaners anyway. Right grim?
June 24th, 2008 at 8:45 am
Of course not, renters are dirty and are content to live in squalor. Renters have no need for cleaners or cleansers.
June 24th, 2008 at 8:46 am
Clot (291) from yesterday: Thanks much for your explanation. The assessments do feel very hit or miss even when comparing properties in the same town. Truly another twist of ‘caveat emptor’ or as John/Bi might say ‘cavity empty’.
June 24th, 2008 at 8:48 am
From Bloomberg:
Financial Firms May Make Deeper Cuts, Eliminate 175,000 Jobs
The world’s biggest financial firms may lose as many as 175,000 jobs by this time next year as Citigroup Inc. and other banks shed workers amid slowing revenue and billions in writedowns, executive recruiters say.
Financial companies have announced plans to trim more than 83,000 jobs since last July, according to figures compiled by Bloomberg. As more employees are fired, workforce reductions may exceed those from the market slump of 2000 to 2003 when technology-related shares collapsed, recruiters said.
“The worst is yet to come,” Russ Gerson, head of New York- based recruiting firm Gerson Group, said yesterday in an interview. “We are going to have a major contraction. This is affecting all areas of the investment banking universe and it’s affecting all areas globally.”
June 24th, 2008 at 8:48 am
I haven’t bought lawn fertilizers in over 2 years.
June 24th, 2008 at 8:50 am
freight rail is going to see a new golden age starting in the next 5 years. Fuel costs are going to kill a large % of the freight by truck business and shift it to freight by rail, as on a per mile basis it takes significantly less fuel o move freight long distance. truck will still be the dominant method for local and short distance transport.
June 24th, 2008 at 8:54 am
From the AFP:
OPEC president sees no consumer relief from high oil prices
OPEC president Chakib Khelil on Tuesday rebuffed calls from oil consuming countries to increase supply, saying the cartel had already done what it could on high prices.
“OPEC has already done what OPEC can do and prices will not come down,” Khelil told journalists as he arrived for a meeting with EU energy officials in Brussels.
…
Other member countries don’t want to increase their production because, as they’ve said many times, from our perspective we don’t see any shortage in the market,” OPEC secretary general Abdullah al-Badri said.
Oil prices rose towards 138 dollars a barrel on Tuesday, closing in on record highs amid lingerong concerns about supplies from the cartel.
In the face of calls from consumer countries for an oil output hike, al-Badri insisted that “the market is full of oil,” blaming “other factors” for the high price of crude, including refinery problems and hedge funds piling into the market.
Khelil blamed high prices on the US “subprime crisis and the ensuing impact of the dollar devaluation and the influx of funds that were loooking for good returns that they could not find in other investments.”
June 24th, 2008 at 8:58 am
kettle1 [33],
That’s why Buffet has been scooping up Burlington Northern shares.
June 24th, 2008 at 9:00 am
#13 Clot: And the budget of course includes a nother 37 Million dollar cut in state aid to Rurtgers, on top of the massive cut they got last year.
NJ is the only state that is cutting aid to higher education. Corzine should just the close the state university system, and be done with it. It is obvious it is not a priority.
June 24th, 2008 at 9:00 am
Unbelievable….. The state is admitting that the buyouts will increase pension liabilities by 225 million and only save a fraction of that in the here and now? Does anyone in trenton have any sense. Imagine if you did this with you personal finances. Lawmakers should be required to take financial planning courses to at least have an idea of how to balance a checkbook.
June 24th, 2008 at 9:00 am
From Bloomberg:
Fannie, Freddie Fail to Relieve Housing by Shunning Jumbo Loans
Three months after Fannie Mae and Freddie Mac won the freedom to step up home-loan purchases, the government-chartered mortgage-finance companies are doing what critics in the Federal Reserve and Congress had predicted.
Instead of using powers granted by Congress to buy jumbo loans for the first time, Freddie Mac and Fannie Mae are purchasing their own mortgage-backed securities, helping reduce losses, company filings show. The large loans, above $417,000, made up almost a third of the U.S. market last year, according to the Mortgage Bankers Association.
Since the rule change took effect in March, Fannie Mae has packaged $24 million of jumbo loans into securities, while Freddie Mac added $220 million, according to the Inside Mortgage Finance newsletter. In April, the companies spent more than $32.4 billion to buy their own instruments, regulatory filings show.
“They were granted expanded opportunity to help recovery in a troubled housing market and yet have appeared to focus on their own recovery,” said former U.S. Representative Richard Baker, a critic of the companies who left office earlier this year to run the Managed Funds Association in Washington.
Congress had kept Fannie Mae and Freddie Mac out of the jumbo market to force them to concentrate on low- and moderate- income borrowers.
The change places taxpayers at greater risk “without facilitating the policy goals I believe the Congress had in mind when they eased these portfolio limits,” said Baker, 60, a Louisiana Republican.
June 24th, 2008 at 9:02 am
Who coulda knew? Corporate self preservation is a greater motivator than altruism.
June 24th, 2008 at 9:02 am
#29 grim; Yes and we turn our underwear inside out, so we can wear it for 2 days.
June 24th, 2008 at 9:04 am
#31 grim: Where is our young Pret? Looks like we may exceed exceed (no surprise) the layoffs after the dot com bust.
June 24th, 2008 at 9:08 am
The Sentate Fiddles while Rome Burns!
Senator Menendez sends me his newsletter.
Check out his video on Senate Bill S.3044.
the Consumer-First Energy Act of 2008
http://menendez.senate.gov/newsletter/MenendezMessage_061808-general.html#1
The legislation would create a tax on “windfall profits” of the major oil companies at a special supplemental rate of 25 percent; repeal the Section 199 deduction for the major oil and gas companies and tighten the rules restricting the use of foreign tax credits on oil and gas related income; suspend filling of the Strategic Petroleum Reserve (SPR); punish price gouging; limit excessive speculation in the oil markets; and crack down on the Organization of the Petroleum Exporting Countries (OPEC). The “windfall profits” tax would not apply to profits of oil companies for qualified investment in clean, affordable and domestically-produced renewable alternative fuels or renewable electricity production.
June 24th, 2008 at 9:08 am
US HOME PRICES IN 20 METROPOLITAN AREAS -15.3 PCT IN APRIL 2008 VS APRIL 2007 - S&P/CASE-SHILLER
June 24th, 2008 at 9:11 am
any opinions on the idea of credit card default causing the next economic tremor?
June 24th, 2008 at 9:13 am
I stil wayting for my goberment stymulus check.
Gobernor Corzine is good. He likes studdents. He giv lot of money to schol. More schols is good. I going to vote Obama becase he is friend of gobernor Corzine.
June 24th, 2008 at 9:13 am
Yeah,
Where is Pret?
You know, that 25% Dow Chemical price increase is huge news. Dow Chemical has 56 billion in sales! Here comes skyrocketing inflation. I think the market will see this Dow announcement as the official start of hyperinflation.
June 24th, 2008 at 9:14 am
From MarketWatch:
Home prices fall 15.3% in past year, Case-Shiller says
Home prices in 20 major U.S. cities have dropped 15.3% in the past year, according to the Case-Shiller home price index released Tuesday by Standard & Poor’s. Prices were down 16.3% in a smaller subset of 10 homes that have been tracked over a longer period. Home prices fell in 12 of 20 cities in April compared with March, but are down in all 20 cities compared with a year earlier. Prices are now down 17.8% from the peak two years ago. The Case-Shiller index tracks sales of the same homes over time, so it’s not influenced by the mix of homes sold in a period.
June 24th, 2008 at 9:15 am
Did anyone see a dude named Ramsey on CBS this AM talking about the housing crisis?? He said that real estate had only gone down in the 4 horseman area..CA, FL, AZ and NV..otherwise RE is still going strong esp in the Northeast and Dallas and Houston…some more towns too…then he said *gasp* that buying in FL right now is a great idea and esp buying in Tampa…Tampa?? Is he on Meth??!!
June 24th, 2008 at 9:16 am
“any opinions on the idea of credit card default causing the next economic tremor?”
kettle,
Yes, along with auto lonas, it’s baked in the cake.
June 24th, 2008 at 9:18 am
Is the 20 city breakdown available yet for the Case-Shiller report?
June 24th, 2008 at 9:19 am
Site is slow, but I was able to pull down the Excel file.
June 24th, 2008 at 9:19 am
NY Metro Commutable Area prices down 10% from the peak.
http://www2.standardandpoors.com/spf/pdf/index/CSHomePrice_History_062418.xls
June 24th, 2008 at 9:20 am
BC,
i am not sure what you mean by b”baked in the cake”. DO you mean its going to happen and thats that, or do you mean that current financials have already taken that into account
June 24th, 2008 at 9:22 am
TBW,
What’s the MLS# on that house in question, I am not adverse to calling the listing agent with questions of it’s interesting history.
Thanks
KL
June 24th, 2008 at 9:22 am
kettle,
It’s in process and going to cause major tremors.
June 24th, 2008 at 9:23 am
From last:
Laurie Says:
June 24th, 2008 at 8:51 am
RE Post #287…Hummers…last summer a few miles from our home I noticed a strange parking lot being built…for one thing it was huge and it had high walls and it had security cameras all over the place…curious..who would build such a high security parking lot?? Upon completion the lot was filled from one end to the other with brand new….Hummers…fresh from the factory to a local parking lot…perhaps they should be more concerned with theft if the lot was full of Prius’s..
Hey - they are guarding thouse hummer from homel;ess/renters/foreclosed home owners - you can easuilly move intio one of thouse hummers - it has as much space as an average room.
June 24th, 2008 at 9:25 am
SocGen winds up $4.3 billion fund
Highest-rated debt repaid, though SIV’s junior holders get nothing
June 24th, 2008 at 9:26 am
KL: MLS # 2809451 and the original listing was # 2540752
Let me know what happens!
June 24th, 2008 at 9:26 am
Anecdote of the day…
NJ Transit train between Secaucus and NY Penn. Two guys from Mahwah (Bergen County last time I checked) having a conversation.
Blueshirt with khakis guy: “I bought and sold at the peak in 2005 but I am gonna be there for a long time so I’m not worried.”
Blueshirt with jeans guy: “Yeah, it’s crazy whats going on. My neighbors have been in their house for over 30 years, put it up for sale at $925 and sold for $785. But you know, you buy today at $785 and in 5 years you will be right back at $925.”
Blueshirt with khakis guy: “yeah, 5 years or even less! They probably took the low price because they had their mortgage paid and just wanted to get out.”
… then they started to discuss the merits of having a vasectomy in the event they already have 3 children.
So there you go, Bergen County will be better than ever in 5 years or less. I wasn’t even aware prices had dropped up there what with the convenient “change at Secaucus” train line.
This thought process of people selling at lower prices because their mortgages are paid off is frequently thrown at me by RE Agents who say I can’t use a low comp from down the street because it was people who either had their house paid off or had to move for job reasons. These comps are not supposed to “count”.
June 24th, 2008 at 9:27 am
Nevermind TBW - I found it.
I will call on it let you know.
KL
June 24th, 2008 at 9:27 am
Welcome to the party!
Charlotte, North Carolina, showed a decline for the first time.
June 24th, 2008 at 9:29 am
348 laurie:RE is still going strong esp in the Northeast
I guess he menans the rise in inventory, an decline in sales is still going strong in teh northeast. perhaops he missed the revisions for NJ, from up 4% to down 30%.
June 24th, 2008 at 9:29 am
thanks KL…this may get interesting…
June 24th, 2008 at 9:29 am
TBW,
I am printing out and I will call, the listing agent on this house is a company I have only heard of recently they popped up in the area they only have forclosures and reo’s. They are all on=ver the place now.
KL
June 24th, 2008 at 9:31 am
Here’s the month-over-previous month rates of decline for the Composite 20 cities in the Case Shiller index:
August 2007 -0.78%
September 2007 -0.89%
October 2007 -1.39%
November 2007 -2.12%
December 2007 -2.22%
January 2008 -2.27%
February 2008 -2.82%
March 2008 -2.39%
April 2008 -1.60%
So at first glance it looks like the rate of decline is slowing the past couple months. But then there’s the seasonal aspect to RE price changes. Here’s the average price change by month of the Case Shiller Composite 10, going back to 1987.
Jan Average 0.06%
Feb Average 0.12%
Mar Average 0.36%
Apr Average 0.65%
May Average 0.92%
Jun Average 1.00%
Jul Average 0.78%
Aug Average 0.59%
Sep Average 0.36%
Oct Average 0.23%
Nov Average 0.03%
Dec Average -0.01%
So we can expect the month-to-month rate of decline to look a bit better for the next couple months before falling off a cliff again. I think the numbers in late ‘08 are going to be incredibly bad.
June 24th, 2008 at 9:32 am
33
Many manufacturers I deal with are adding “fuel surcharges” to their shipments. I guess it’s tough to get a price increase shoved through the pipeline with no demand. If they aren’t adding surcharges they are increasing the size of the order that must be purchased to get free shipping, sometimes by as much as 50%.
June 24th, 2008 at 9:32 am
59 - blue collar workers? :)
June 24th, 2008 at 9:33 am
#59 seneca: Sounds like the guys are trying to rationalize , what cannot be rationalized.
Sad part is, these guys could most likely be employed in the financial sector, and with all the layoffs going on in that sector they still don’t get it.
In my own neck of Bergen Co, I am hearing a lot of anger from people, and I have found that anger in many instances is a cover for fear.
June 24th, 2008 at 9:35 am
17 grim
“Olympic-sized master bedroom”
I tried out for the olympic sleeping team, but didn’t qualify.
I had a good excuse, though.
I was short on sleep.
June 24th, 2008 at 9:37 am
44 Kettle
I just heard a report on the radio - 106.3 (take it for what it’s worth. I didn’t get where they got the story) that credit card companies are denying applications in areas where the housing industry is crashing badly- specifically California, Nevada and Florida.
It’s a comin!
June 24th, 2008 at 9:37 am
PGC - Regarding yesterday’s diaper report. You probably have to buy even less diapers than you think.
The $5 discount comes off as a manufacturer’s coupon. In my experience with baby bucks, you actually get credit for the non-sale price towards the baby bucks total. The baby bucks $10 discount is applied as a coupon for your order, not as a price reduction on the boxes of diapers. My guess is that you can actually get your gas card for 3 boxes of diapers and a box of Mac and Cheese.
Happy Shopping.
June 24th, 2008 at 9:38 am
“Germany may report a shrinking in its economy for the second quarter of this year and stagnation would probably be a positive outcome, Deputy Economy Minister Walther Otremba said on Tuesday.”
http://www.cnbc.com/id/25343376
But I thought Europe/Asia were going to bail us out of our crisis. What happened to the decoupled world economy?
June 24th, 2008 at 9:39 am
17 Grim and 69 Patient
I thought Olympic size only refers to pools. What does one need with an Olympic sized bedroom? Nevermind. I just answered my own question.
June 24th, 2008 at 9:40 am
Kettle1, BC Bob,
It’s going exactly as planned. Saw the writing on the wall when the CC issuers were changing the bankruptcy laws a few year’s back.
http://www.tmcnet.com/usubmit/2008/06/23/3513118.htm
Apparently, people are not only increasing their cc debt at alarming rates, but there is an increase in people sending in only the minimum payment. This is a historical precursor to increased CC defaults.
Auto loans, I know little about, although with the ability to repossess the cars and the fact that most loans will probably be a decent part of the way payed off, then the damage probably won’t rival that of the CC debt which averages over $2,000 per citizen in the US.
June 24th, 2008 at 9:40 am
Yea, that was an interesting conversation.
It seems that the owners have applied for a loan modification. It has been over 2.5 months and they hav’nt hear yet. The house has not been shown since the listing was taken, however when questioned about the incredible differences in the the listing info I was told it was a mistake. I mentioned that it was quite a mistake and I did’nt understand how that kind of mistake could be made? At that point I was hung up on.
Should make interesting talking point at our next office meeting.
Thanks TBW
KL
June 24th, 2008 at 9:43 am
#71 NJGator:
I knew you would eventually chime in on the ShopRite sale.
June 24th, 2008 at 9:43 am
Waters,
I’d caution you against using month of month changes, pricing has been shown to have seasonal variation.
The year over year decline in pricing has been accelerating in the NY Metro Commutable area:
Date HPI YOY Change
January 2007 212.78 -0.34%
February 2007 212.52 -0.91%
March 2007 212.39 -0.91%
April 2007 211.61 -1.56%
May 2007 210.51 -2.35%
June 2007 209.49 -2.94%
July 2007 208.36 -3.20%
August 2007 207.15 -3.35%
September 2007 206.35 -3.61%
October 2007 205.55 -4.07%
November 2007 204.57 -4.51%
December 2007 202.44 -5.31%
January 2008 200.94 -5.56%
February 2008 198.60 -6.55%
March 2008 196.56 -7.45%
April 2008 193.93 -8.35%
June 24th, 2008 at 9:44 am
well at least johnny got his pins inplace
June 24th, 2008 at 9:44 am
#75: KL: Thanks for the followup. Sounds shady. Isn’t against MLS rules to have incorrect listing information?
June 24th, 2008 at 9:46 am
Waters :65
While the Case-Shiller 20 city composite numbers have merit, I would like to see the New York Metro numbers broken out.
Your list of month over previous month is good, but how about year over year.
June 24th, 2008 at 9:48 am
I want to get some other people’s opinions on this. With the state of disarray home financing is in, two friends of mine that are married are buying a house, and I personally think there’s no way they are going to get a mortgage.
Between the two of them, they probably make between 90k-100k. He has $12k in credit card debt, $9k in student loans, an auto loan that is probably about $15k and some medical bills. She only has an auto loan with about $20k on it and plans on getting a student loan this summer. Her credit is great and his not so much.
They got the seller to accept their offer of $335k and they plan on only putting down 5%. There’s no way they’re gonna get financing for this, right?
June 24th, 2008 at 9:49 am
27 NNJ
“Case of Case-Shiller said in march 08, ‘Housing has hit bottom’.”
Which is why, in future, pretorius (if he shows up again) won’t be able to claim that the Case-Schiller numbers are biased becaues they need to justify their predictions that things will get worse.
June 24th, 2008 at 9:49 am
tell em to pass ,,, 5% down,,, they are not ready
June 24th, 2008 at 9:50 am
29 grim/tbw
“Of course not, renters are dirty and are content to live in squalor. Renters have no need for cleaners or cleansers.”
Nor do we hire maids or plumbers (which is why our Olympic-sized bedrooms are often mistaken for Olympic-sized pools).
June 24th, 2008 at 9:50 am
#81, that’s a 2005 slam dunk. but an air ball by today’s standards.
June 24th, 2008 at 9:51 am
TBW 79
Yes it is. I am taking this further, will let you know ( actually will let my broker take it further if she choses)
KL
June 24th, 2008 at 9:52 am
That’s what I keep telling them, but they don’t want to listen to me. I guess we’ll find out. But I’m not crazy telling them no way is all I want to know.
June 24th, 2008 at 9:52 am
#56 Al / Laurie
I was driving past the Cadillac / Hummer dealership in Florham Park a few days back. About a year ago the lot would be full of Hummers with a line of them out front. When I drove past I saw three parked at the back. I wonder when the name change is going to happen.
June 24th, 2008 at 9:52 am
“The world’s biggest financial firms may lose as many as 175,000 jobs by this time next year ”
Can anyone remember how the pretorius concept worked; something about how if those jobs haven’t been lost yet, then it’s logically impossible for them ever to be lost, and we can therefore conclude that the 2001/02 downturn was worse?
June 24th, 2008 at 9:54 am
johnny tells bloom ,,, he’s got our best interest in mind for the long term.
no tax increases
June 24th, 2008 at 9:54 am
nose, actually grew during interview
June 24th, 2008 at 9:55 am
RESkeptic,
They’ll be able to find a loan, but they’ll be paying a tremendously high rate. I had a client quoted near double digits recently.
June 24th, 2008 at 9:55 am
#87
although, FHA could be an option for them. but they should not be buying regardless; pay the debt down.
June 24th, 2008 at 9:56 am
“They were granted expanded opportunity to help recovery in a troubled housing market and yet have appeared to focus on their own recovery,” said former U.S. Representative Richard Baker
Ha ha.
That’s a damn shame.
June 24th, 2008 at 9:57 am
njpatient Says:
June 24th, 2008 at 9:50 am
29 grim/tbw
“Of course not, renters are dirty and are content to live in squalor. Renters have no need for cleaners or cleansers.”
Nor do we hire maids or plumbers (which is why our Olympic-sized bedrooms are often mistaken for Olympic-sized pools).
Why would I hire plumbers??? I have a landlord for that.
P.S. Moving into my new rental house (the ewame price as my one bedroom apartment before) and let me tell you - taking off 45 years old, fabric/paper composite wall-paper is a b1tch of a job…
Since we got huge berak on the rent for this house, landlord will only fix “real” stuff- as required in a lease - such as heating, structural, water leaks, plumbing, electrical.
All cosmetic are on us. So off comes wall-paper, on comes paint. And no, No cleaners whatsoever.
Whats most amazing about this report is that Dow and most major chemicals manufacturers have being rising their prices slowly but steadilly, over the last 2 years. And now comes 25%. BOOM!!!
June 24th, 2008 at 9:57 am
From MarketWatch:
Four years of home gains have been wiped out
Home prices in 20 major U.S. cities have dropped a record 15.3% in the past year and are now back to where they were in 2004, according to the Case-Shiller home price index released Tuesday by Standard & Poor’s.
Prices in the 20 cities are now down 17.8% from the peak two years ago. The biggest declines were seen in Las Vegas, Miami and Phoenix, with prices falling by 25% or more in the past year. Prices in 10 cities have fallen by more than 10%.
June 24th, 2008 at 9:58 am
grim (77),
The seasonality is what I was pointing out in the second part of my post. I do like to look at the month-to-month since it’s a 3 month moving average– I think it has some value. The seasonality aspect makes it more complex obviously.
June 24th, 2008 at 9:58 am
44 kettle
I agree on the credit card front (I think it’ll take another 18 months to really rear it’s head).
We’ll have plenty to keep us occupied in the meantime.
June 24th, 2008 at 9:59 am
#71 NJGator.
The $5 off the diapers is a manufacturers coupon. That brings the cost from $24.99 to the sale price of $19.99. You earn a $10 BB coupon for every $75 worth of baby products. The $10 can be spent on anything. The cashier was being helpful and took the $10 straight off the diapers, so we had to make up the balance with some boxes of new Fruit Cherios. I had some nice 75c coupons they doubled.
I see this as a sport. My record for savings is $100 groceries for $40.
June 24th, 2008 at 10:00 am
48 laurie
Yeah - saw that. Mrs. Patient and I were pointing at the guy and laughing.
June 24th, 2008 at 10:02 am
afe (30)-
“…or as John/Bi might say ‘cavity empty’…”
In NJ, no cavity stays empty long. Our gubmint probes every opening and reams it dry.
June 24th, 2008 at 10:04 am
52 grim
Looking at month-to-month numbers (and recognizing that there must be some seasonal effect) it looks like the price drop in the NYC commutable area is still accelerating.
Whoooooooosh!!
I love the Tower of Terror - what a ride!
June 24th, 2008 at 10:06 am
Fiddy (80),
Grim posted the NY metro YOY above (down 8.35% for the April index). March’s index was down 7.45%, so the YOY declines are accelerating.
Here’s the composite-20 YOY declines just for fun.
January 2007 -0.51%
February 2007 -1.31%
March 2007 -1.82%
April 2007 -2.69%
May 2007 -3.39%
June 2007 -3.94%
July 2007 -4.36%
August 2007 -4.84%
September 2007 -5.50%
October 2007 -6.67%
November 2007 -8.32%
December 2007 -9.73%
January 2008 -11.35%
February 2008 -13.51%
March 2008 -15.27%
April 2008 -16.35%
June 24th, 2008 at 10:07 am
Gobernor Corzine on Bloomberg radio now.
He says NJ Attorney General working hard to fight corruption.
” Too many corrupt politicians have been elected into office.”
This is news?
Where my check is?
June 24th, 2008 at 10:07 am
From MarketWatch:
U.S. consumer confidence plunges again
U.S. consumer confidence plunged in June to reach its fifth lowest reading ever, the Conference Board reported Tuesday, as expectations reached a record low. The June consumer confidence index fell to 50.4 from a May reading that was revised to 58.1 from a prior estimate of 57.2. Economists surveyed by MarketWatch had expected a June reading of 56.0. The percentage of consumers saying jobs are “hard to get” rose to 30.5% in June from 28.3% in May.
June 24th, 2008 at 10:08 am
59 seneca
“This thought process of people selling at lower prices because their mortgages are paid off is frequently thrown at me by RE Agents who say I can’t use a low comp from down the street because it was people who either had their house paid off or had to move for job reasons. These comps are not supposed to “count”.”
If you’re ever confused about a particulary comp and whether it “counts”, just have a look at nearby recent sales. If the particular comp you’re looking at is LOWER, then it DOESN’T COUNT.
You can figure out the specific reason why it doesn’t count later.
Ask the next RE agent that tells you this “so you’re telling me that house sales don’t count as comparables unless the seller is upside down?”
June 24th, 2008 at 10:08 am
#61 John,
I think Charlotte is down at least 10% yoy. The builders were doing things like free upgrades and thousands towards closing costs to mask the decline. Now that scheme is being exposed and the builders have cut prices.
I predict by the end of this year Charlotte will officially be down at least 10% yoy.
June 24th, 2008 at 10:09 am
61 john
“Charlotte, North Carolina, showed a decline for the first time.”
Cue Mitchell: “It’s a great time to buy!”
June 24th, 2008 at 10:10 am
And here are the YOY declines by metro area.
NV-Las Vegas -26.8%
FL-Miami -26.7%
AZ-Phoenix -25.0%
CA-Los Angeles -23.1%
CA-San Diego -22.4%
CA-San Francisco -22.1%
FL-Tampa -20.4%
MI-Detroit -18.0%
MN-Minneapolis -15.5%
DC-Washington -14.8%
IL-Chicago -9.3%
NY-New York -8.4%
GA-Atlanta -7.5%
OH-Cleveland -6.8%
MA-Boston -6.4%
WA-Seattle -4.9%
OR-Portland -4.7%
CO-Denver -4.7%
TX-Dallas -3.4%
NC-Charlotte -0.1%
Composite-10 -16.3%
Composite-20 -15.3%
The CS Shiller price index update day is my favorite day of the month. Is that sad?
June 24th, 2008 at 10:10 am
60 rhyming
If it’s interesting, can you let the rest of us know, too? Tbw piqued my interest.
Thanks.
June 24th, 2008 at 10:10 am
From MarketWatch:
U.S. home prices fall 4.6% in past year. OFHEO says
U.S. home prices fell 0.8% in April compared with March, and were down 4.6% in the past year, the Office of Federal Housing Enterprise Oversight reported Tuesday. Prices were down in seven of nine regions in April, the government agency said. Prices have retreated to the December 2005 levels. The OFHEO index shows a smaller year-over-year decline than the narrower Case-Shiller 20-city index, which reported prices down 15.3% in the past year. The OFHEO index has a broader geographic reach, but doesn’t count homes purchased by subprime or jumbo loans.
June 24th, 2008 at 10:11 am
65 waters
great numbers
thanks
June 24th, 2008 at 10:12 am
(81)-
FHA, it’s a slam-dunk acceptance. As long as his FICO’s over 580. Anything under 580, the secondary market won’t take it.
In fact, they’ll only have to put down 3%, and they can accept the whole 3% from the seller.
And, voila! 100% financing, to marginally-qualified borrowers!
Subprime is not dead. It just goes by the name FHA.
June 24th, 2008 at 10:13 am
any opinions on the idea of credit card default causing the next economic tremor?
3-5 yrs down the line as minimum pmnts will be made and balances growing uptil then. Next round of write down will be caused by ALT-A loans. Thi swill make subprime look like a stroll in the park.
I think 2 yrs after Alt-A is done deflating we will be nibbling around a bottom.
June 24th, 2008 at 10:15 am
#89 njpatient: Sounds to me like you do not buy the pret concept, that we live in a sea of wealth that stretches form Va to Mass, full of talented wealthy people, who will keep real estate prices high?
He explained all of this to us months ago.
June 24th, 2008 at 10:16 am
From MarketWatch:
U.S. June consumer confidence 50.4 vs 58.1 in May
U.S. June consumer confidence below 56.0 expected
U.S. June consumer expectations at record low
June 24th, 2008 at 10:16 am
that we live in a sea of wealth that stretches form Va to Mass, full of talented wealthy people, who will keep real estate prices high?
You forgot young and beautiful.
June 24th, 2008 at 10:18 am
#7
“the disaster i am waiting to see unfold is large scale defaulting on credit cards. given current bankruptcy laws, these are secured debts so people cannot currently walk away from them.”
not entirely accurate. credit card debt is still not considered secured like a mortgage or a car loan. so if you have these kinds of debts, in bankruptcy, those lenders will recover against their collateral first. credit card debt has been moved up the chain from general unsecured debt, but in many cases, after the secured lenders foreclose on the debtors big assets, there is very little left over to liquidate, so the unsecured lenders, regardless of their relative priority, tend to be equally screwed.
the real problem for most people w/r/t the new bankruptcy laws is the income threshhold for filing a Ch. 7. Almost everyone will be forced into Ch.13 this time around, which means they will have to work out a 5 yr repayment plan with their creditors instead of simply liquidating and starting over. But even in this case, credit card companies will likely only recover a fraction of what is owed to them (which is better than nothing, which is what they would get in Ch. 7). Widespread consumer bankruptcies will still be brutal on creditors, even with the new law
June 24th, 2008 at 10:18 am
patient (108)-
Please do not bait Mitchell. It’s been nice around here lately without his tedious and incessant posts about nothing.
June 24th, 2008 at 10:18 am
He makes the news again.
From HousingWire:
http://www.housingwire.com/2008/06/23/housing-outlook-grim-as-downturn-called-worst-in-a-generation/
June 24th, 2008 at 10:20 am
I appreciate the numbers. I must have sped past Grim’s posting.
The Metro NY numbers are of interest to me. While it makes for interesting reading about the other area….I don’t care as much about Vegas, FLA and CA.
The C-S Metro area by the way, includes a very wide geographical area. All the way out to Long Island, and into CT. Hell, Pike County in PA is even represented.
June 24th, 2008 at 10:20 am
#113
I would think even this would be too risky for them given the amount of debt they already have. Their DTI would have to be astronomical after you pile on a $2k a month mortgage payment, plus taxes and insurance.
June 24th, 2008 at 10:20 am
75 rhyming/tbw
inneresting
very inneresting.
June 24th, 2008 at 10:21 am
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June 24th, 2008 at 10:22 am
Harvard study on housing for 2008.
http://www.jchs.harvard.edu/publications/markets/son2008/son2008.pdf
June 24th, 2008 at 10:27 am
“U.S. home prices fall 4.6% in past year. OFHEO says”
Our government is cooking the numbers again.
June 24th, 2008 at 10:27 am
“Four years of home gains have been wiped out”
[96],
PUFF. The market giveth, the market taketh. It will continue to taketh. There is nothing the masters can do to stop it. You can extend a lifeline, institute hope and even create a freeze. The market could give 2 s#its.
When is Beazer going under?
June 24th, 2008 at 10:27 am
I predict by the end of this year Charlotte will officially be down at least 10% yoy.
I agree. the only reason that Charlotte became of interest was due to Florida being overpriced. Now that Florida has crashed there is absolutely no interest in Charlotte and it too will crash and go back to historical valuations of it’s relationship to Florida.
The more things change the more they remain the same.
June 24th, 2008 at 10:28 am
When is Beazer going under?
soon. be patient.
June 24th, 2008 at 10:29 am
87 skep
They might conceivably get the financing, although I doubt it (the auto loans and credit card balances are an issue, the student loans are not), but as a young couple with no kids and a housing market that will continue to fall for at least another 18 months, buying now when they could rent and stay mobile is, pardon me, dumb.
June 24th, 2008 at 10:29 am
The C-S Metro area by the way, includes a very wide geographical area. All the way out to Long Island, and into CT. Hell, Pike County in PA is even represented.
You can make the same argument for any of the indicies that use MSA. The New York-Northern New Jersey-Long Island, NY-NJ-PA Metropolitan Statistical Area is pretty similar to the area used by Case Shiller.
NAR regional breakdown isn’t very useful, neither is the OFHEO monthly regional breakdown (NJ/NY/PA are lumped together).
The same criticism applies to the NJAR statewide data as well. Does someone in Gloucester County care about a Bergen County home sale?
We’ve got to make due with the data we have. Part of that is accepting and understanding the limitations.
June 24th, 2008 at 10:29 am
shoulda said RESkep, as skep is someone else entirely.
June 24th, 2008 at 10:30 am
#44
“any opinions on the idea of credit card default causing the next economic tremor?”
Kettle– The question for most people is: at what point does the minimum monthly payment exceed your ability to pay? Most people have no intention of ever paying off their credit cards (and the creditors like this). So balances are rising rapidly, but I do not think this in itself will send people over the edge as the minimum payment remains small relative to the balance.
I also do not think resetting mortgages will be a widespread bankruptcy trigger because people will just walk away from their home (why would they want to try to do a workout when they owe more than the house is worth). The thing that is likely to send a lot of people into bankruptcy I think is energy prices (gas and heating oil). So if energy prices don’t let up by this winter, you may see credit card companies start to take big losses at their customers’ balances are written down in a wave of Ch. 13 cases
June 24th, 2008 at 10:33 am
103 waters
“Here’s the composite-20 YOY declines just for fun”
You were right. That WAS fun!!
June 24th, 2008 at 10:38 am
In my area, I like the granularity that OFHEO provides. The Edison MSA is a good proxy, rather than that wide NY Metro. Now if only OFHEO would include a better cross-section of mortgages.
NAR Stats = BS (plus their math skills stink)
June 24th, 2008 at 10:38 am
#81
Reskeptic–
I know a couple who just bought a house outside boston. The guy is in law school; the wife runs her own business out of the home (small, obviously). Stated income mortgage closed last month. They put 20% down and I’m pretty sure they have good FICO scores, but I was still surprised they were able to get a mortgage given their employment situation. So the mortgage market may be looser in some cases than the general perception
June 24th, 2008 at 10:38 am
115 3b
“a sea of wealth that stretches form Va to Mass”
Also known as the NYC Commutable Area? Not all of that is “close to Manhattan”, of course.
June 24th, 2008 at 10:39 am
One of my friends called last night saying he found a house in marlboro. I told him I was sorry to hear that.
I asked him if it was for 30% off the peak, if not keep waiting.
June 24th, 2008 at 10:39 am
117 grim
“You forgot young and beautiful.”
I think you meant bold and beautiful.
Or young and restless.
Like sands through the hourglass, so are the profits of our flips.
June 24th, 2008 at 10:41 am
119 clot
“Please do not bait Mitchell. It’s been nice around here lately without his tedious and incessant posts about nothing.”
Sorry. My bad.
You said “tedious and incessant”, which is a little bit unfair. To be fair, you should have included “long-winded.”
June 24th, 2008 at 10:43 am
njp,
You might be right, I did hear some chatter about modifying visa rules (h1b) to allow more models into Manhattan.
June 24th, 2008 at 10:43 am
It seems the Bill preventing RCA among towns has passed senate. The bill number is A500.
http://www.njleg.state.nj.us/2008/Bills/A0500/500_I1.HTM
6/23/2008 Passed Senate (Passed Both Houses) (21-16)
So its now awaiting Governer’s signature, which I believe he has agreed to in past.
June 24th, 2008 at 10:43 am
#109
NY-New York -8.4%
MA-Boston -6.4%
I think the Boston/New York comparison is interesting. The fact that Boston is lower may not be statistically significant. Then again, their decline seemed to start about a year before the decline in the NYC area, so it may be that Boston gives some sort of indication of when the NY price decline will start to slow.
June 24th, 2008 at 10:43 am
Charlotte is an interesting case because they didn’t have huge gains like the rest of the country:
YOY change
April 2000 4.23%
April 2001 1.51%
April 2002 2.09%
April 2003 1.61%
April 2004 3.69%
April 2005 2.91%
April 2006 7.37%
April 2007 6.97%
April 2008 -0.12%
I think declines there will be due to the national RE crash and credit crisis moreso than CLT RE being overvalued. Also at issue is that CLT is a banking town. That won’t help. I’d bet against them having a 10% YOY decline though.
June 24th, 2008 at 10:46 am
#139 njpatient:Or young and restless.
Perhaps young and clueless.
June 24th, 2008 at 10:48 am
144 waters
I do not buy the argument that, in a given region prices will not fall far if they never rose far. It could just as easily be the case that, all other things being equal, prices would have fallen precipitously in Charlotte during the 2001-2007 period if not for the housing bubble.
June 24th, 2008 at 10:49 am
#144 waters; Charlotte Is a 2 pony town, BOA, and Wahovia.
Neither one of these concerns are in good shape, to say the least.
I would not rule out a 10% drop or more, by year end.
June 24th, 2008 at 10:51 am
#144
Charlotte’s weaknesss is a massive amount of new construction. That is why their prices did not go up too much even as there was an influx of high income new residents. Now with the major employers there getting pounded, there are a lot of new developments which I would think will be heavily discounted
June 24th, 2008 at 10:53 am
Card Issuers Get Personal to Check Credit
When it comes to staying in good graces with your credit-card company, having an unsullied credit record might not be enough.
http://finance.yahoo.com/banking-budgeting/article/105283/Card-Issuers-Get-Personal-to-Check-Credit
June 24th, 2008 at 10:54 am
Charlotte is an interesting case because they didn’t have huge gains like the rest of the country:
YOY change
April 2000 4.23%
April 2001 1.51%
April 2002 2.09%
April 2003 1.61%
April 2004 3.69%
April 2005 2.91%
April 2006 7.37%
April 2007 6.97%
April 2008 -0.12%
I think declines there will be due to the national RE crash and credit crisis moreso than CLT RE being overvalued. Also at issue is that CLT is a banking town. That won’t help. I’d bet against them having a 10% YOY decline though.
There is only one reason why NC will experience pain. INVENTORY.
June 24th, 2008 at 10:54 am
njp
# njpatient Says:
June 24th, 2008 at 10:48 am
144 waters
“I do not buy the argument that, in a given region prices will not fall far if they never rose far. It could just as easily be the case that, all other things being equal, prices would have fallen precipitously in Charlotte during the 2001-2007 period if not for the housing bubble.”
get used to it. that is the mantra for philly realtors.
June 24th, 2008 at 10:57 am
http://www.reuters.com/article/ousiv/idUSJAT00371420080624
Greenspan US Economy on Brink of recession.
This guy should be hung for treason.
June 24th, 2008 at 10:57 am
#144 waters,
The builders were giving away tons of stuff from summer of 07 till this Spring. That really masks the figures. The upgrades and incentives the builders were throwing in were worth 8 to 10% more then the purchase price, yet the prices still dropped yoy.
Charlotte is going to get hammered like a frat boy on a Thursday night.
June 24th, 2008 at 10:58 am
106 njpatient
I agree that the agents rule of thumb is “If the particular comp you’re looking at is LOWER, then it DOESN’T COUNT.”
I guess I will have to ask if this rule also applied in 2001-2005 for homes that were selling over comps.
I went to an open house this past Sunday. Nicest home on the block in a bad neighborhood, with the highest taxes to go with it. Over $10k! Ask was $429. Realtor asked me how much I think home is worth. I suggested maybe $350. She laughed. I walked. I can buy a house in the town next door for $600k and still not have $10k taxes. Keep building those 3000 sqft homes people…
I am going to buy when builders start buying McMansions, knocking them down and building 3BR 1 1/2 bath Cape Cods.
June 24th, 2008 at 10:58 am
Greenspan said he did not believe arguments that the housing problems in the U.S. were due to interest rates being too low during his tenure. “As far as I’m concerned, the data do not support it (that argument). The housing bubble is clearly an international phenomenon.”
Blame Globalization.
June 24th, 2008 at 11:01 am
Greenspan said he did not believe arguments that the housing problems in the U.S. were due to interest rates being too low during his tenure. “As far as I’m concerned, the data do not support it (that argument). The housing bubble is clearly an international phenomenon.”
June 24th, 2008 at 11:02 am
I think Greenspan’s name is mispelled. Should be GreenSPIN.
June 24th, 2008 at 11:03 am
Unlike Charlotte in Sex and the City, the one down south is going down quicker than a hooker during fleet week.
June 24th, 2008 at 11:04 am
Seneca: Awesome! I would love to see smaller homes being built. Bring back the modest side hall colonial. Also, the raised ranch…bring those back too
June 24th, 2008 at 11:05 am
Anyone ever hear of a place called “Loan Search” out of Verona NJ? Are they legit?
Thanks
June 24th, 2008 at 11:06 am
I predict by the end of this year Charlotte will officially be down at least 10% yoy.
Charlotte, in a way, probably has a “pant up” price drop coming. The home builders in Charlotte have masked price declines by throwing in free upgrades to compensate for falling prices. Once you max out the freebees, these declines will become more evident. You can only pack a poorly constructed monster box with so much granite & stainless.
June 24th, 2008 at 11:09 am
I would love to see smaller homes being built
Not until land prices fall enough. The cost of land is without a doubt the single biggest fixed cost of building in the northeast. I know it seems counterintuitive, but it is cheaper to build a bigger house as those high fixed costs are spread over a greater number of square feet.
Builders could build Capes and Ranches, but with land prices where they are, they would look incredibly overpriced compared to a McMansion.
June 24th, 2008 at 11:16 am
grim,
Are new home sales included in Case-Shiller? I seem to recall it being based on resales of the same homes.
June 24th, 2008 at 11:16 am
for the Hoboken crowd.
http://www.nytimes.com/2008/06/22/realestate/22njzo.html?_r=2&ref=realestate&oref=slogin&oref=slogin
June 24th, 2008 at 11:17 am
grim Says:
June 24th, 2008 at 10:43 am
njp, You might be right, I did hear some chatter about modifying visa rules (h1b) to allow more models into Manhattan.
grim: No is was Visa with a capital “V” as in MasterCard….and I think it was more of the Client No. 9 -type…
June 24th, 2008 at 11:18 am
I could never understand the allure of Hoboken. I guess it is for those who didn’t want the college party to end.
June 24th, 2008 at 11:21 am
TBW:
“I could never understand the allure of Hoboken.”
Where else can a 27-year old hook up with a 19-year old every Thursday night? Hanging out at the local student center is WAY more work.
June 24th, 2008 at 11:23 am
Sean Says:
June 24th, 2008 at 11:16 am
for the Hoboken crowd.
S-man: as you know, that author is renown as a shill and the NY Times is at the nadir relative to its cred….Hoboken is in serious trouble from a RE and fiscal perspective, and this joker is blowing sunshine up people’s posterior…..
As for the opposing/alarmist/idiot/doomsday writing….someone here posted this link last week….
http://nymag.com/news/businessfinance/bottomline/47823/
June 24th, 2008 at 11:23 am
#130
I know, you’re preaching to the choir here. I kind of hope they do get denied, because I feel it’s a really bad idea. Their reasoning is that they get the seller to accept and offer 25% below asking, so it’s a good idea.
June 24th, 2008 at 11:25 am
I normally don’t like to paste large section of articles, but I think this one deserves good read. The whole notion of Economic Cycle is debunked. Come to think of it, I am still waiting for Nasdaq 4500, as the cycle is long overdue since 2002. Where is it?
The idea that we’re even in a business cycle is whistling in the dark. To think of the economy being in a cycle is to imply an automatic recovery is in store. This free-market idea was developed at the National Bureau of Economic Research by opponents of government regulatory policy. The fantasy is that the economy oscillates in a fairly smooth and regular sine curve. But this always has been a fiction. 19th-century writers didn’t speak of economic cycles, but rather of periodic financial crises. There is a slow buildup, and a sudden plunge, so the shape is ratchet-shaped. Today’s plunging real estate and stock market prices are not a self-correcting ebb and flow in which downturns set in motion automatic stabilizers that produce recovery. Each U.S. recovery since World War II has started out from a higher level of debt. The result is like driving a car with the brakes pressed more and more tightly. Alan Greenspan at the Federal Reserve flooded the banking system with enough credit to enable debts to be carried by borrowing against the rising price of homes and office buildings, corporate stocks and bonds. In effect, the interest charge was simply added onto the debt balance. But now prices are falling, leaving families, companies and many Wall Street firms with negative equity. Asset-price inflation fueled by the Federal Reserve is giving way to debt deflation. Today, the prospects are dim for paying off debts out of further price gains for homes and real estate. Speculators have pulled out of the market and as late as 2006 they accounted for about a sixth of new purchases. The United States and other countries have reached the point where interest and amortization payments are absorbing the entire economic surplus of so many individuals, so many companies and so many government bodies that new construction, investment and employment are grinding to a halt. Families, real estate investors and companies are obliged to use their disposable income to pay their creditors. This leaves them without enough money to sustain the living standards of recent years and they no longer can wipe out their debts by declaring bankruptcy as in times past, because Congress has passed the harsh bankruptcy law that credit-card and bank lobbies paid them to pass. This means that there won’t be a rebound, and it will take longer than 2009 to recover.
http://www.dissidentvoice.org/2008/06/the-game-is-over-there-wont-be-a-rebound/
June 24th, 2008 at 11:26 am
TBW - E-Z Commute. Bus to NYC stopped at my doorstep every 5 minutes. I am by nature a lazy person, and it doesn’t get much easier than that.
I did, of course, move out before I was 30. Stu was too cheap to pay Hoboken rents, and so we wound up in Montclair : )
June 24th, 2008 at 11:26 am
re; #165 - a set aside of 1,000 H-1B Visa’s for models.
http://www.nytimes.com/2008/06/22/realestate/22njzo.html?_r=2&ref=realestate&oref=slogin&oref=slogin
I don’t know what the means test for the these H-1B visas will be. For most workers it is a salary survey and I belive a 4 year degree in engineering of some kind. Perhaps the models will need to pass some kind of test in Anthony Weiner’s office?
June 24th, 2008 at 11:28 am
Could anyone provide details on
MLS ID# 2537656. I’m interested in previous sales and listings.
I track Rutherford houses and I wonder if I am seeing a step down in prices.
June 24th, 2008 at 11:35 am
The Blame Game
It’s a classic Wall Street “whodunit,” complete with a collection of greedy investment bankers, slow-witted policymakers and numbskull Florida home buyers. But with so many suspects, how will Americans ever figure out who killed the once-vibrant and cheery U.S. economy?
“There were a lot of people who contributed to the real estate bubble and the easing of lending standards that led to the subprime debacle,” says Ethan Harris, chief U.S. economist at Lehman Brothers. So many, indeed, that he and other pundits find it difficult to point the finger at any single player.
You can, though. Play the Portfolio.com brackets and pick your own culprit.
June 24th, 2008 at 11:35 am
The appeal of Hoboken, is the convenience of city that small, walkable, etc. The Location and convenience of being so close to Manhattan and yet it costs about half as much to own, renting is a little closer Manhattan rents are approx 1.5x what Hoboken is. The bars are not actually for residents it is for the aging frat boy crowd that lives with their parents in suburban NJ. Thankfully that is only Friday and Saturday nights. The location is particularly appealing to people who work downtown and on NJ’s gold coast which is mostly financial services. That said I keep scratching my head at the increase considering the economic prospect for some 60% of the residents(Previously most wealthy residents) looks particularly dim. I cannot really fathom it as I am approaching my home purchase with trepidation after seeing hundreds of people handed pink slips at work.
June 24th, 2008 at 11:39 am
Sean, they will give almost anyone an H1B visa, especially for computers. Most of these people have something known as an MCA which is like a community college degree. I fully support the idea of bring technical experts here when there is a shortage in supply but the H1B program is a joke in my opinion and is really only used to suppress wages.
June 24th, 2008 at 11:42 am
From Global Insight (no link):
S&P/Case-Shiller Home Price Indices
April 2008
“House Prices Still Dropping at Record Setting Rates”
Patrick Newport
U.S. Economist
Global Insight
Bottom Line
● The downward trend in prices continued during April: the 10-City Composite Index dropped 16.3% year-on-year (a record decline), while the 20-City Composite was down 15.3% (also a record).
● Year-over-year prices retreated in all 20 cities covered; adjusted for inflation, prices declined even more since the CPI was rising 3.9% y/y in April.
● In 13 cities, prices were falling at record year-on-year rates; in 10 cities, they were dropping at double-digit rates; in seven cities, the drop was 20% or more.
● Las Vegas (down 26.8%), followed by Miami (down 26.7%) and Phoenix (down 25.0%), reported the steepest declines.
● House prices still have room to drop a lot more.
Outlook
House prices, according to the Case-Shiller house price indexes (but not according to other measures), are still in a freefall. The 10-City Composite Index dropped 16.4% year-on-year (a record decline) in April, while the 20-City Composite was down 15.3% (also a record).
In 13 cities, prices were falling at record year-on-year (y/y) rates. Ten cities posted double-digit declines. In seven cities, prices were down more than 20%. Worst of all, in many places, prices are still dropping at accelerated rates.
The Case-Shiller indices are dropping much more than other house price measures. The Office of Federal Housing Enterprise Oversight (OFHEO) monthly house price purchase index, for example, was down 4.6% (y/y) in April, while the National Association of Realtor’s median price was down 8.5%.
Unfortunately, all methods devised to measure house prices have shortcomings, and it is impossible to state with any precision how much house prices are actually falling nationally or locally.
During 1990–2000, the Case-Shiller 10-City Composite Index was flat, after adjusting for inflation. During 2000–06, its real value rose 78%. The index has dropped about 24% in real terms since peaking. But given the current level of unsold homes on the market, the number of foreclosures already in or about to enter the pipeline, and the run-up in prices over 2000–06, this index is likely to drop much more.
June 24th, 2008 at 11:43 am
grim 162
I have always understood the financial reasons that builders build the bigger houses. It has always been a disappointment to me as I prefer a smaller (not small but smaller than a McM) house with a large lot where one could host a wiffle ball game.
I also understand that Americans are so obsessed with having “stuff” that these larger homes with their oversized three car garages were warranted ’cause you have to have a place to put your “stuff”. I am a minimalist and don’t like “stuff” so aside from the basics, I don’t need an oversized house.
I would argue that at some point, you have to consider the carrying costs of an oversized home with its high heating/AC costs and enormous taxes. NYC Condos with high common charges and taxes sell for less than slightly smaller condos with lower monthly costs.
Having a larger lawn usually means a few more passes back and forth with the mower. More green, less “bonus rooms” I say. But I am odd so….
June 24th, 2008 at 11:45 am
NEW YORK (MarketWatch) — India’s central bank hiked its benchmark interest rate for the second time this month on Tuesday in a move to curb soaring inflation. The Reserve Bank of India raised its repo rate by 50 basis points to 8.5%. It also hiked the cash reserve ratio by 50 basis points to 8.75%. The latest interest rate hike comes on the heels of a 25 basis points repo rate hike delivered on June 11
June 24th, 2008 at 11:47 am
160, they are legit, I have used them twice. They hook you up will local-mom-pop banks that are usually a little lower than other places.
June 24th, 2008 at 12:04 pm
Kettle #7
Kettle, here is the poor man’s 7 year bankruptcy plan.
#1 Stop paying your credit card
#2 Get caller ID and don’t answer the phone calls from creditors
#3 Pay cash for everything
#4 After 7 years(statutue of limitations) your debts are gone and you didn’t pay a dime.
I don’t think it is going to take long for debtors to figure this one out.
June 24th, 2008 at 12:10 pm
Aaron: Also, buy a new car. You won’t be able to get one for at least 7 years.
June 24th, 2008 at 12:13 pm